Wednesday, June 29, 2016

Pennsylvania Local Services Tax Increases in Multiple Cities

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PNN: PA Local Tax

As part of an economic recovery plan, financially distressed municipalities in Pennsylvania are allowed to increase their Local Services Tax (LST) from the previous maximum rate of $52 annually to $156 annually.

The first city to increase its LST was Scranton, in mid-2015. It implemented the tax retroactively, to January 1, 2015. Just before the beginning of 2016, both Aliquippa and Johnstown increased their LST rates for 2016. Most recently, Harrisburg has followed suit by increasing its LST, to be applied retroactively from January 1, 2016.

All of the plans have similar provisions that differ only slightly among the municipalities. Employees working within the city, whether residents or nonresidents, must pay the same amount of LST. Employers are required to withhold the appropriate amount per qualifying employee, due within 30 days of the end of each quarter. All increased their LST rates from $52 annually, which is the maximum allowable amount for municipalities not officially declared financially distressed. Certain disabled veterans and reservists called into active duty are exempt from LST. Employees earning less than a certain income annually are exempt, although the amount differs. The updates for 2016 for the municipalities of Harrisburg, Aliquippa, and Johnstown are outlined as follows:

Harrisburg
New LST rate: $156 annually
Income exemption: Less than $24,500 annual income
Effective date: Begins July 1, 2016. Retroactive to January 1, 2016.
Tax collector: Keystone Collections Group
Employers will be required to pay the equivalent of $5 a week per qualifying employee from July 1 through the end of the year, due within 30 days of the end of each quarter.

Aliquippa
New LST rate: $104 annually
Income exemption: Less than $21,000 annual income
Effective Date: Began January 1, 2016.
Tax collector: Berkheimer Tax Administrator

Johnstown
New LST rate: $156 annually
Income exemption: Less than $21,000 annual income
Effective Date: Began January 1, 2016.
Tax collector: Berkheimer Tax Administrator

Check back with Pay News Now as we continue to monitor the status of other municipalities’ LST rates in Pennsylvania.